News & Views

Government procurement to be dependent on tax record?

There is a (very brief) consultation on the proposed new procurement policy which will come into force on 1 April 2013. This can be found at HMRC Consultation document Tax and Procurement.

Broadly, the new policy on procurement is that, from 1 April 2013, potential suppliers to central government will have to self-certify their recent tax compliance history as part of the selection stage of procurements with a value of £2 million or more.

Additionally, Contracting Authorities will ensure that the contractual documentation enables them to terminate a contract, at their discretion, if a supplier has an ‘occasion of non-compliance’. It also places a contractual obligation on the supplier to keep the Contracting Authority notified of changes in relation to tax compliance.

An ‘occasion of non compliance’ is defined as “any tax return found to be incorrect as a consequence of HMRC successfully taking action under the General Anti-Abuse Rule Bill 2013; or any targeted anti-avoidance rule (TAAR); or under the abuse principle. It also includes any tax return found to be incorrect because the business had used a scheme notifiable under the Disclosure of Tax Avoidance Scheme rules that has failed; or where the supplier’s tax affairs have given rise to a conviction for tax related offences or to a penalty for civil fraud or evasion.”

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